- Australia’s economy slowed in the first quarter due to a drop in consumer spending.
- There is still little chance that the RBA will lower rates this year.
- US employment data revealed that job vacancies fell.
AUD/USD price analysis shows slight bullish sentiment as Aussie rises despite poor Australian GDP data. The currency strengthened against a weak dollar after data in the previous session revealed a decline in US jobs.
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Data from Australia on Wednesday showed the economy slowed in the first quarter as consumer spending fell amid high interest rates. GDP increased by 0.1%, missing forecasts by 0.2%. Similarly, the annual figure fell from 1.5% to 1.1% growth. However, there is still little chance that the RBA will lower rates this year. At the same time, the risks of a rate increase have fallen significantly.
Currently, markets are pricing in a 50% chance that the Reserve Bank of Australia will cut rates in December. However, they fully expect a reduction only in May next year.
Meanwhile, after several poor economic reports, the dollar remained fragile, raising expectations for a rate cut by the Fed. On Tuesday, employment data revealed that job vacancies fell when economists had forecast a slight increase. The report followed Monday’s poor manufacturing PMI data and a softer-than-expected inflation number on Friday last week. The US economy is slowing down due to high interest rates. As a result, investors are more confident that the Fed will cut rates in September. More reports due this week, including business activity in the service sector and non-farm payrolls, will further shape the outlook for a Fed rate cut.
AUD/USD key events today
- Change in non-agricultural employment in the US ADP
- US ISM services PMI
Technical analysis of AUD/USD prices: Bulls are holding in the consolidation area
On the technical side, the AUD/USD price entered a period of consolidation after failing to trade above the 0.6700 resistance level. The bears took control when the price later broke below its bullish trend line. However, they could not break below the 0.6600 support, leading to consolidation. Accordingly, the price is stuck between the 0.6600 support and the 0.6700 resistance.
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Within this consolidation area, the price is above the 30-SMA, indicating that the bulls are in the lead. Furthermore, the RSI is trading just above 50, supporting bullish momentum. Therefore, AUD/USD may retest range resistance soon.
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